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TMI Blog2016 (5) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors was excessive having regard to the fair market value of the said goods or services as no comparable case was brought on record to substantiate the disallowance made by the AO. The AO also did not bring any cogent evidence to prove that the assessee has not received any services and paid the mony. In view of this fact the order of CIT(A) confirming the addition made by the AO u/s 40A(2)(b) cannot be sustained and therefore, the addition to be deleted by deciding issue in favour of the assessee. Penalty u/s 271AAA - Held that:- We find from the additional grounds raised by the assessee vide application dated 02.07.2015 qua ignoring the statutory construction of section 271(AAA) of the Act and other issues of sustaining the penalty u/s 271(1)(c) when the statutory explanation to the said section does not apply to the assessee’s case. It is also a fact that this issue was not raised before First Appellate Authority. In the present circumstances and facts we are of the view that this issue should go back to the file of CIT(A) for fresh adjudication. We, therefore, without going into the merits of the case restore this issue to the file of the ld. CIT(A) to examine the issue rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant. 7. The Learned Commissioner of Income Tax (Appeals) is not justified in holding that no services are rendered by the directors to Yatra Art Fund, without examining their role in running the affairs of the trust fund. 8. The Learned Commissioner of Income Tax (Appeals) failed to consider the advisory fees to the directors in proper perspective when the appellant had. not camouflaged the said payment as part of the director's salaries by the appellant, in which case said payments would have passed muster without demur. 9. The learned Commissioner of Income Tax (Appeals) is not justified in confirming the levy' of interest under Section 234 B of the Act at ₹ 18,18,526/- and under section 234 C in the' sum of ₹ 15,825/ disregarding the factual and legal submissions made that proper credit for taxes paid is not given. 10. In any event, the order of the Commissioner of Income Tax (Appeals) is, illegal and without reference to the facts and circumstances of the appellant's case and the law applicable thereto. 11. For these grounds and for such other grounds that may be adduced at the time of hearing it is prayed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... site of making such disallowance. The ld counsel further submitted that there was no loss of revenue for these payments made as the assessee as well as the directors were assessed to tax at maximum rate and therefore disallowance was wrong and deserved deletion. The Ld DR on the other hand relied heavily on the orders of authority below. 6. We have heard the rival submissions and pursued the material on record placed before us. We find from the orders of authorities below that a sum of ₹ 16,17,742 was disallowed being 25% of travelling expenses for not filing sufficient details and being personal element therein and was upheld by the CIT(A) for the same reason. In our view, the disallowance of 25% of total travelling expenses which is adhoc and on estimated basis is excessive and unreasonable and we, therefore, restrict the disallowance to the extent of 10% of total travelling which come to ₹ 6,47,097/- thereby deleting the addition to the extent of ₹ 9,70,645/-. Therefore, the issue raised in the ground nos.1, 2 3 is partly allowed. In respect of disallowance u/s 40 A (2) of ₹ 11,14,272/- paid to the directors as advisory fee, we find that no cogent ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) failed to appreciate that the various sale instances alleged as unaccounted in the notice for levy of penalty and the order thereunder does not relate to this assessment year but to earlier years. 4. The Learned Commissioner of Income Tax (Appeals) failed to construe that the alleged payment of cash of ₹ 16 lakhs found in seized record Annexure A1-12, was not corroborated contemporaneously with the parties involved in the transaction and that the appellant was made to admit the alleged transaction as unaccounted during the course of search and no further independent investigation was carried out to link the admission of the ₹ 22 lakhs suo-moto and voluntarily in the return of income filed by the appellant as additional income to the alleged incriminating materials. 5. The Learned Commissioner of Income Tax (Appeals) failed to construe that the cumulative cash payment found in annexure A 2 aforesaid was ₹ 18 lakhs while what was admitted as additional income on an ad-hoc basis was ₹ 22 lakhs and there is no establishment of contumacious conduct either qua the seized materials or the additional amounts offered suo -Moto in the income tax retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstantial question of law relating thereto. 4. In view of the above the two additional grounds may be admitted. on record for disposal on merits. 12. The facts of the case are that the search and seizure action was conducted on the assessee s premises on 17.04.2007 and incriminating documentary evidences of unaccounted cash sales were found which were not recorded in the books of account. In the return filed u/s 153A of the Act for various years, the assessee did not declared concealed income from unaccounted sales in respect of assessment year 2007-08. During the year no addition was made to the income of the assessee as the assessee had declared additional income of ₹ 22.00 lakhs over and above its normal income as per audited final accounts covering various discrepancies found in the record. The AO observed that the concealment of the income was detected by the department at the time of conducting search on 17.04.2007 and it was only in consequences to such detection, the assessee declared in the return filed on 31.7.2007 which is after date of search. Accordingly, the AO initiated penalty proceedings against the assessee for concealment of income. In its repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of levy of levy of 271 (1 )(c) of the I. T. Act, the Assessing Officer is not required to establish means-rea as in the case of prosecution, which is a criminal liability. 7.2 In view of the above, the penalty levied u/s.271 (1 )(c) of the Act amounting to ₹ 7,40,520/- for the A.Y.2007-08 is here by confirmed 13. Aggrieved by the decision of the ld. CIT(A), the assessee is in appeal before us. The ld. Counsel for the assessee submitted that the assessee has raised additional grounds vide application dated 2.7.2015 and prayed for admission of the additional grounds and adjudicate them along with the grounds filed in form No.36 in memorandum of appeal. 14. We have considered the rival submissions and perused the material placed before us. We find from the additional grounds raised by the assessee vide application dated 02.07.2015 qua ignoring the statutory construction of section 271(AAA) of the Act and other issues of sustaining the penalty u/s 271(1)(c) when the statutory explanation to the said section does not apply to the assessee s case. It is also a fact that this issue was not raised before First Appellate Authority. In the present circums ..... X X X X Extracts X X X X X X X X Extracts X X X X
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